• Oil prices gained traction for the third consecutive session and shot to over two-month tops.
• Optimism over easing of restrictions in Western countries helped offset COVID-19 jitters in Asia.
• Sustained USD selling bias provided an additional boost to the dollar-denominated commodity.

WTI crude oil trimmed a part of its intraday gains to the highest level since March 8 and was last seen trading just above mid-$66.00s, up around 0.50% for the day.

The commodity built on its recent strong rebound from the vicinity of the $63.00/barrel mark and gained traction for the third consecutive session on Tuesday. The momentum pushed spot prices to the $67.00 level and was sponsored by the easing of restrictions on economic activity in Western countries, including the US, UK and Europe.

The optimism helped offset concerns that fresh COVID-19 outbreaks and the imposition of new restrictive measures in some Asian countries could hinder fuel demand recovery. Apart from this, the prevalent US dollar selling bias was seen as another factor that acted as a tailwind for dollar-denominated commodities, including oil.

The disappointing release of the US Retail Sales report last Friday reaffirmed the Fed's dovish view and forced investors to scale back their expectations for an earlier than expected lift-off. This, along with a generally positive risk tone, further undermine the safe-haven currency and dragged the key USD Index to near three-month lows.

The USD selling bias remained unabated following a duo of dismal US housing market data for April – Building Permits and Housing Starts. Market participants now look forward to the latest FOMC monetary policy meeting minutes, which will play a key role in influencing the near-term USD price dynamics.

In the meantime, traders are likely to take cues from the weekly API inventory report to grab some short-term opportunities later during the US session.

Technical levels to watch